Let’s cast a glance at the 12 companies which have applied for listing and own up to tens of trillions of dong worth of charter capital

The coming year will see many companies be listed or switch from one stock exchange to another. Next year is also the final year for State-owned enterprises to implement their flotation plans or divest capital in line with the Government’s road map.

The waiting list

The HCMC Stock Exchange (HOSE) says it has received listing applications from 12 companies, some among whom possess tens of trillions of dong worth of charter capital. On November 19, Vietnam Maritime Commercial Joint Stock Bank (MSB) filed their documents, registering 1,175 billion shares to be listed. Under the direction of the Government and the State Bank of Vietnam, all banks must be listed and register for transactions on the official market by the end of 2020. Therefore, in addition to MSB, the stock market will see many other banks go ahead with their listing in the coming time. This is also an important legal basis which allows the market to enjoy a drastic increase in new supply.

In addition to the banking industry, the lineup of enterprises waiting to get on the HOSE encompasses some notable names, such as Duc Giang Chemicals Group, Military Insurance Corporation, Vietnam Rubber Industry Group (GVR), An Gia Group, Airport Services Group, etc.

Among the above companies, GVR has the greatest scale with four billion shares, equivalent to VND40 trillion worth of charter capital. The group was floated in 2018 but could only sell around 20% of the volume on offer. Currently, the State still holds most of the capital there. GVR is active on UPCoM selling a share for VND13,980, equivalent to a market capitalization of VND55.92 trillion. On this exchange, GVR’s capitalization is only behind that of ACV (VND164.08 trillion), VGI (nearly VND88.18 trillion) and VEA (VND64.42 trillion). Their basic financial indicators including earnings per share (EPS) and return on equity (ROE) in the last four quarters are not very satisfactory (only VND830 and 6.65% respectively). Even so, there are still expectations for GVR as this group has high potential with vast agricultural and industrial land funds in their hands. What’s more, GVR has a large number of enterprises under their umbrella, plus many associated companies that are doing business effectively with good dividend payout like Nam Tan Uyen and Phuoc Hoa.

Meanwhile, a real estate giant, the Investment and Industrial Development Corporation—Becamex (BCM), has canceled their registration for stock trading on UPCoM to be prepared for the listing on the HOSE. Reportedly, BCM will move to the new bourse within this year and officially start trading in January 2020. The firm is building up their charter capital. Notably, BCM intends to give their existing shareholders a 5:1 purchase option at the price of VND15,000 per share, equivalent to 207 million shares. Additionally, there is a plan to issue 758 million shares individually, at a price expected to be higher than the book value before the time of issuance (the book value in 2018 is VND12,315 per share). This plan is to be carried out in 2019-2020. It is estimated that the total volume in circulation will double after BCM completes these releases.

The 2020 deadline is near

In the restructuring scheme for securities and insurance markets by 2020 with a vision to 2025, which was approved by the Prime Minister in early 2019, the scale of Vietnam’s stock market capitalization in 2020 must reach 100% of GDP (currently 80%). This goal depends on two factors: the stock price and the number of shares listed. In particular, increasing the volume of goods in the market proves to be an effective solution since it both helps with commodity diversification and makes the size of the market grow faster than just increasing prices.

Next year is also the final year for State-owned enterprises to implement their flotation plans or divest capital in line with the Government’s road map.

Numerous large firms are part of this plan. Specifically, 93 enterprises will carry out their flotation by the end of 2020, including many companies much anticipated because of their enormous potentials.

Among the enterprises which would soon be floated, where the State holds a stake of 65% or more, the Bank for Agriculture and Rural Development (Agribank) is a notable name. By the end of 2018, Agribank’s consolidated assets had totaled VND1.28 million billion and their equity VND58 trillion. The bank’s after-tax profit has been growing in recent years. In 2018, for example, Agribank gained over VND6.04 trillion, nearly two times greater than their profit in 2017.

Another conglomerate is Vietnam National Coal and Mineral Industries Group—TKV (Vinacomin). According to a report in 2018, the groups’ total revenue was VND121 trillion, of which VND62 trillion came from coal production. Their profit was put at VND4 trillion, a rise of VND1 trillion from 2017.

Moreover, one should not fail to mention the two telecom giants with considerable potentials, Vietnam Posts and Telecommunications Group (VNPT) and Vietnam Mobile Telecom Services One Member Limited Liability Company (MobiFone).

In addition, there are Power Generation Corporation 1 (Genco 1) and Power Generation Corporation 2 (Genco 2). By the end of 2018, Genco 1’s total assets had amounted to over VND112 trillion and their equity VND23.2 trillion. The respective figures for Genco 2 are more than VND31 trillion and over VND12 trillion.

Also in the above list are many other names with assets of up to trillions of dong such as Vietnam Cement Industry Corporation (Vicem), Saigon Trading Group (Satra), Urban Infrastructure Development Investment Corporation (UDIC), etc.